Understanding National Minimum Wage law

Calculating hours worked and paid leave

The hours for which you must pay your workers the National Minimum Wage (NMW) depend on the type of work they do.

You can find more information in our table showing how the calculation of hours worked differs in each case for the National Minimum Wage.

Paid leave
Almost all workers are entitled to paid leave under the Working Time Regulations 1998.

Workers - including full-time, part-time, agency and casual workers - are entitled to four weeks' paid leave per year. For example, a worker who works five days a week will be entitled to 20 days' paid holiday per year (5 days x 4 weeks = 20 days) while a worker who works three days a week will be entitled to 12 days' paid holiday (3 days x 4 weeks = 12 days). The law does not entitle workers to paid leave for public holidays, although you may agree to include it in workers' leave entitlement.

A week's pay is calculated according to the type of work performed:

• workers on fixed hours and pay should be paid a normal week's wage
• workers on variable pay (including output workers) should be paid their average hourly rate multiplied by their normal working hours calculated over a 12-week period
• shift workers should be paid their average weekly hours over the preceeding 12 weeks multiplied by their average hourly rate

For more information on paid leave, see our guide: know how much holiday to give your staff.

For the purposes of NMW, time workers' paid leave is not included in NMW hours calculations. However, the normal rules governing statutory paid holidays, sick pay and maternity, paternity and adoption pay still apply.

If the worker is a salaried-hours worker, absences such as rest breaks, lunch breaks, holidays, sick absence or maternity, paternity and adoption leave are counted towards time when the minimum wage is payable if they form part of the worker's basic minimum hours.

Output and unmeasured workers' paid leave is not included in calculating NMW.

Read a short guide for employers about the National Minimum Wage on the DTI website.

Subjects covered in this guide

• Introduction
• National Minimum Wage rates
• Who is entitled and who is exempt?
• What is included and not included?
• The four types of work
• Calculating hours worked and paid leave
• Records and reporting - best practice
• Enforcement and penalties
  

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